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Revenue collections for February were higher than expected. But after examining the details, the February results do not reveal much about the accuracy of the fiscal year 2014 revenue estimates or the direction of the Kansas economy.
Even if KanCare is successful, costs still will rise. The governor’s budget appropriately adds $70 million for Medicaid in FY 2015. A decision to allow expanded Medicaid eligibility would not alter that amount much.
The governor’s spending proposals increase the gap between revenue and expenditures, but ignoring the governor’s proposals does not fix the deficit.
The state’s revenue estimators predicted that income this fiscal year would drop $485 million from last year as a result of dramatic tax policy changes. Seven months into fiscal year 2014, they appear right on the mark.
Lawmakers are able to finance the governor’s FY 2014 and FY 2015 budget proposals by drawing down the bank balance. Once the balance is gone, the state's revenue stream does not support current spending patterns. So, how did the state obtain the $709 million balance that is now being spent?
Gov. Sam Brownback has recommended revisions to the already approved fiscal year 2014 and FY 2015 state budgets. In both fiscal years the governor proposes to spend more than the state receives. The governor’s spending proposals can be financed in the short term by drawing down the state bank account, but what happens after that?
Gov. Sam Brownback has recommended a budget that spends substantially more money than the state receives. The spending level that the governor proposes can work in the short term by drawing down the state bank account but cannot be maintained in the future.
State spending in Kansas and across the nation does not stay level. It goes up. Spending may not increase consistently each year, but over time, budget growth is inevitable as states grapple with inflation, growing populations and new needs.
Lawmakers will soon be working on the next state budget, and they face some difficult decisions. Expected tax revenue does not cover expenditures, but the pressures to add even more spending will be great. You can get a glimpse of the issues ahead by playing KHI’s Budget Puzzle. The puzzle gives you the power to raise or lower taxes and spending to determine if the Kansas budget can be balanced.
Lawmakers are a long distance from the state’s written school finance requirements, and they will have their work cut out for them in the next legislative session no matter what happens with the school funding case now being considered by the Kansas Supreme Court.